REUTERS Fed funds down to 0.5 percent in late trade [JBHKPZN]
NEW YORK, Sept 15 (Reuters) - Federal funds traded in the
U.S. interbank lending market slipped to about 0.5 percent late
on Monday in the aftermath of two Federal Reserve temporary
additions to the banking system that totaled a combined $70
billion.
Earlier on Monday, federal funds had surged to 6 percent in
the market, well above the Federal Reserve's target rate of 2
percent.
When inter-bank lending rates shoot up in the market, that
often reflects distrust among financial institutions of lending
to some other counterparties. Global market participants' risk
aversion surged on Monday as the U.S. banking crisis escalated,
analysts said.
U.S. short-term interest rate futures showed about a 76
percent chance of an implied 25-basis-points Federal Reserve
rate cut, to 1.75 percent, in the target rate at its
policy-setting meeting Tuesday.
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